All Forum Posts by: Jay Mersfelder

Sean,

I am not sure of the exact show, but I know a couple of the most recent shows talked about the LLC thing. I'd start there.

Those "Multiple People" who you are referring to that you know are either costing themselves money by buying properties in an LLC that they dont need (to start out), or they are much larger of a business than you, and need the LLC to put properties in because banks usually cut you off around 10 properties under your own name. To be perfectly blunt (sorry I'm a very direct person), you have not earned the right to have the same problems as the other people you know.

You have 1/10 properties in your own name.... Once you get to 5-6, then worry about it...haha. 

 Sean,

They could be costing a lot of money yes. Let me answer it better:

When you put properties into your own name, you get an advantage of lower interest rates and better terms. So if you buy a property under your own name with a conventional loan right now, you would be able to get around a 2.5%-3% rate and 5% down payment depending on your credit. If you buy a property under an LLC right now, you are looking at a 4.5%-5.5% rate with 20% down. That 2%-3% difference is hundreds of dollars a MONTH that you dont get to keep, plus the extra down payment.

So while you are a small rental property investor, take advantage of the low rates and low down payments while you can!!!! I'm at 5 properties right now and they are all under 3.25% interest rate and in my own name. Soon, I will have to transition to 5% with my LLC, but I want as many low-rate loans as possible.

The LLC can be created now if you want. For reference, I created mine when I bought my 4th property. The way it would structure is when you do your taxes, you run the income you are making through your rentals through the LLC even though the LLC does not own them. This will give your LLC time to establish so when you need to borrow money and possibly get a company vehicle or credit cards, your LLC has 2 years of history.

I hope this better clarifies. I would find a good CPA and talk to them about this. Maybe in your state this wont work. As a reference, I am located in Florida. Feel free to respond to this with any questions or PM me in the future.

-Matt